Multinational companies are adjusting to shorter supply chains

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Bosses are re-examining exactly how their firms plan, source, make and deliver

years of globalisation from 1990, one of the ideas that became gospel, spread by authors such as Thomas Friedman, was that the world had become flat. National boundaries mattered very little in terms of sourcing and manufacturing, went the argument.

Americans will not have to wait till October to see the impact of their political shocks, as Mr Trump’s tariffs on steel, aluminium and Chinese imports are already biting. A working paper by Mary Amiti and colleagues published in March by the National Bureau of Economic Research calculated that by the end of 2018 they had cost American consumers $1.4bn a month. Retailers are being squeezed, with Walmart and Target warning of price rises to come.

The trade war has also led to a rethink at Apple, which has reportedly asked its biggest suppliers to see how much it would cost to shift 15- 30% of its supply base out of China to South-East Asia or India. Liu Young-way, the new chairman of Foxconn, a Taiwanese contract manufacturer that assembles most of Apple’s devices, recently declared that his firm could supply all iPhones for the American market from plants outside China if necessary.

 

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